After the results of the Scottish Independence referendum were announced, the Prime Minister, promised that not only would Scotland receive what was promised, but that expanded devolution would extend to Wales, Northern Ireland and England as well. This is quite a shift from the devolution instituted by the Labour Party. In other words, the UK government is looking to divide its powers among its constituent countries. In my Bog on this subject last month, I asked how this might be done.

My business partner, David Seidel, is a Canadian and British lawyer. He suggested that Canada offered a perfect paradigm and precedent, which may help the UK coalition in these matters.

Commentators and economists abound with their views on UK devolution as this article testifies but are we really ready to turn our backs on the past?

Devolution is in the air

Bruce Katz, a vice president of the Brookings Institution says that “devolution is in the air in the UK and in a remarkable turn of events, Britain’s political parties are competing over how, not whether, to devolve power to cities and metropolitan areas.”

Mr Katz observes that in the past fifteen years, Whitehall’s iron grip on power has slowly begun to loosen:

Since the late 1990s, powers have been partially devolved to Scotland and Wales.

London now has a directly elected mayor (as do other large cities like Bristol and Liverpool) with powers over transportation, economic development and planning.

More recently, “metro deals” have been struck between central government and major British city regions like Greater Manchester, enabling greater flexibility and sparking collaboration across jurisdictional lines.

A report from the RSA City Growth Commission, ‘Connected Cities: The link to Growth‘, published July 2014, suggested that to create a more productive system of cities and economic growth for the UK as a whole, metros need to have much greater influence in national infrastructure decision-making. The RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) is an enlightenment organisation committed to finding innovative and creative practical solutions to today’s social challenges. In its final report published on 21 October, it focused on a plan to devolve power from Whitehall to Britain’s metro areas. If UK cities were able to make their own decisions on tax and spending, it could boost economic growth by £79bn a year by 2030. RSA is pushing for draft legislation to be in place by 2015 claiming that “Our centralised political economy is not ‘fit for purpose’.” You can listen to a programme on BBC4: The Devolutionaries – Powering up England’s Cities here. [Interesting, that it mentions “England’s Cities” rather than “Britain’s Cities”.] The RSA’s Final Report: Unleashing Metro Growth, is available here.

According to Mr Katz, this scenario presents an opportune time to discuss what long-standing fiscal devolution in the United States might teach Britain. You can read about it here. Mr Katz warns that while the United States offer\s many lessons, it is not perfect. He says: “Some areas of policy naturally lie at the federal or state level (like inter-metropolitan transportation), so when those levels of government don’t act, nothing gets done. Municipal fragmentation within metro areas means that cities often find themselves in competition with each other for economic anchors.”

According to Jochen Hung in an article in the Guardian last month, a federal system needs a strong bond to hold individual elements together. Post-war Germany had it but, he says, it’s doubtful the UK does.

From Empire-Building to Federalism

Jeffery Simpson in The Globe & Mail reminds us that while we Brits created federalisms around the world, we never wanted it at home. Mr Simpson writes about how we governed territories throughout the British Empire but, when on withdrawal from these territories, we left behind federal structures. He adds: “Some of these have endured for a long time, as with Canada and Australia; others for rather less time, as with India; while still other federations fell apart, as between Singapore and Malaysia, and various rickety efforts in Africa and the Caribbean.”

“Federalism is a cinch and it will make for a better realm”, says Chris Giles in an interesting piece in the FT, which you can read here.

Feedback

Is there something we can learn from the Americans and others about federalism or are we fixated on the status quo – preferring centralised government for Britons? Please let me have your thoughts in the comment box below or at mpollins@onesmartplace.com

Martin Pollins is a Chartered Accountant with wide experience in corporate finance and business management. He holds a number of directorships and has served on the boards of several companies, including those listed on the London Stock Exchange, AIM and OFEX.

He was a Council member of the Institute of Chartered Accountants in England and Wales from 1988 to 1996.

Martin Pollins ran his own firm based in Sussex and was the first Accountancy firm in the UK to advertise on television and Martin went on to create and launch the CharterGroup Partnership (the UK's first Accountancy network) and then LawGroup UK (one of the largest networks of lawyers in the country).

Martin started work on the Bizezia concept in 1996, developing the broad range of information resources and products over the past 18 years.